• FDCPA Statutory Damages Award Reduced Because Collection Calls Were Misleading But Nonthreatening And Only Occurred On One Day
  • June 13, 2013
  • Law Firm: Kronick Moskovitz Tiedemann Girard A Law Corporation - Sacramento Office
  • A woman received phone calls from a debt collector who said a “civil claim” was pending against the woman for a consumer debt.  The woman sued in federal court, alleging violations of state and federal fair debt collection laws.  The debt collector failed to respond to the lawsuit, and so the woman sought a default judgment, requesting the maximum amount of statutory damages along with attorneys’ fees and costs.  This request was uncontested.  A federal Magistrate Judge awarded statutory damages but reduced the award because the collection calls took place on only one day and did not threaten or demand immediate payment.  (Cuevas v. Check Resolution Services (Slip Copy, E.D.Cal., May 20, 2013).


    On one day in December 2011, Sacramento resident Annette Cuevas received phone calls from a representative of Check Resolution Services (“Check Resolution”) attempting to collect a consumer debt.  The caller stated that Cuevas should have her social security number and photo ID ready and that a “civil claim” was pending against her.  The following April, Cuevas filed a lawsuit in federal district court, claiming that Check Resolution’s calls violated the federal Fair Debt Collection Practices Act (“FDCPA”) and California’s Rosenthal Fair Debt Collection Practices Act (“Rosenthal Act”).  Check Resolution failed to answer the lawsuit, and Cuevas filed a motion for default judgment.  The motion was dismissed by the district court without prejudice, and Cuevas filed a renewed motion requesting statutory damages under the FDCPA and the Rosenthal Act, as well as attorneys’ fees and costs.  The renewed motion was reviewed by a federal Magistrate Judge who made findings and recommendations for the District Court Judge.


    The Magistrate Judge recommended granting Cuevas’s renewed motion for default judgment and awarding statutory damages and attorneys’ fees and costs, but in a reduced amount from what Cuevas requested.

    The Magistrate Judge noted that the complaint filed by Cuevas was a form complaint with few facts about the case.  The renewed motion contained additional facts apparently aimed at supplementing the complaint, but the Magistrate Judge stated that only facts alleged within the “operative pleading,” that is, the complaint, could be considered by the court to support a motion for default judgment.  Despite the dearth of facts, the Magistrate Judge found sufficient facts pled to support a finding that Check Resolution violated several sections of the FDCPA and the Rosenthal Act.  The Magistrate Judge held that Check Resolution used a misleading representation that harassed, oppressed or abused Ms. Cuevas.  The court also held that such collection conduct constituted unfair or unconscionable means to collect a debt.

    Having found liability, the Magistrate Judge examined the issue of damages, noting that the FDCPA statutory award amount was determined based on several factors, including the frequency, nature, and level of intentionality of the violations.  Cuevas asked the court for the maximum statutory damages allowable: $1,000 for the FDCPA violation and $1,000 for the Rosenthal Act violation.  Regarding the FDCPA violation, Cuevas argued that Check Resolution’s behavior was egregious enough to warrant a maximum award because Check Resolution was a corporation and because the collection phone calls involved an intentional falsehood about a pending civil lawsuit.  The Magistrate Judge rejected this argument, noting that the calls took place on only one day and did not “directly threaten” or demand immediate payment from Cuevas.  The court awarded $150 in statutory damages, explaining that this level of misconduct did not justify a maximum statutory damages award.

    Under the Rosenthal Act, statutory damages are awarded if the violation was performed “willfully and knowingly.”  The Magistrate Judge stated that Cuevas had not stated facts or brought evidence showing that Check Resolution’s actions were knowing or willful at a level that would warrant a maximum statutory damages award under state law.  The Magistrate Judge recommended only $100 in statutory damages for the Rosenthal Act violation.

    Turning to the issue of attorneys’ fees and costs, the Magistrate Judge stated that the hourly rate of $325.00 per hour requested by Cuevas for her attorney, Thomas Martin, was reasonable.  However, the Magistrate Judge recommended reducing the fee request of $5,720 by $1,014 to deduct time spent on the renewed motion for default judgment.  The court reasoned that it would be unfair to expect Check Resolution to compensate Cuevas for legal work that could have been avoided had the original Motion for Default Judgment been prepared properly.  The Magistrate Judge recommended an attorney fee award of $4,706 and $749.70 in costs for filing fees and service of process, which were reasonable.